U.S. Department of Justice
Bureau of Alcohol, Tobacco,
Firearms and Explosives
Firearms Technology Branch
August 15, 2008
Martinsburg, West Virginia 25405
www.atf.gov


Manufacturing of Firearms

Below are examples of operations performed on firearms and guidance as to whether or not such operations would be considered manufacturing under the Gun Control Act (GCA). These examples do not address the question of whether the operations are considered manufacturing for purposes of determining excise tax.

Any questions concerning the payment of excise tax should be directed to the Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of the Treasury. Generally, a person should obtain a license as a manufacturer of firearms if the person: 1) is performing operations that create firearms or alter firearms (in the case of alterations, the work is not being performed at the request of customers, rather the person who is altering the firearms is purchasing them, making the changes, and then reselling them); 2) is performing the operations as a regular course of business or trade; and 3) is performing the operations for the purpose of sale or distribution of the firearms.


1. A company produces a quantity of firearm frames or receivers for sale to customers who will assemble firearms.


The company is engaged in the business of manufacturing firearms and should be
licensed as a manufacturer of firearms.


2. A company produces frames or receivers for another company that assembles and sells the firearms.


Both companies are engaged in the business of manufacturing firearms, and each should be licensed as a manufacturer of firearms.


3. A company provides frames to a subcontractor company that performs machining operations on the frames and returns the frames to the original company that assembles and sells the completed firearms.


Both companies are engaged in the business of manufacturing firearms and should be licensed as manufacturers of firearms.


-2-
Manufacturing of Firearms
ATF, Firearms Technology Branch


4. A company produces barrels for firearms and sells the barrels to another company that assembles and sells complete firearms.


Because barrels are not firearms, the company that manufactures the barrels is not a manufacturer of firearms. The company that assembles and sells the firearms should be licensed as a manufacturer of firearms.

5. A company receives firearm frames from individual customers, attaches stocks and barrels, and returns the firearms to the customers for the customers' personal use.

The operations performed on the firearms were not for the purpose of sale or distribution. The company should be licensed as a dealer or gunsmith, not as a manufacturer of firearms.


6. A company acquires one receiver, assembles one firearm, and sells the firearm.

The company is not manufacturing firearms as a regular course of trade or business and is not engaged in the business of manufacturing firearms. This company does not need to be licensed as a
manufacturer.


7. An individual acquires frames or receivers and assembles firearms for his or her personal use, not for sale or distribution.

The individual is not manufacturing firearms for sale or distribution and is not required to be a licensed manufacturer.


8. A gunsmith regularly buys military-type firearms, Mausers, etc., and "sporterizes" them for resale.


The gunsmith is in the business of manufacturing firearms and should be licensed as a manufacturer.

9. A gunsmith buys semiautomatic pistols and modifies the slides to accept a new style of sights. The sights are not usually sold with these firearms and do not attach to the existing mounting openings. The gunsmith offers these firearms for sale.


This would be considered the manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.


-3-
Manufacturing of Firearms
ATF, Firearms Technology Branch


10. A gunsmith buys government model pistols and installs "drop-in" precision trigger parts or other "drop-in parts" for the purpose of resale.

This would be considered the manufacturing of firearms, as the gunsmith is purchasing the firearms, modifying the firearms, and selling them. The gunsmith should be licensed as a manufacturer.

11. A gunsmith buys surplus military rifles, bends the bolts to accept a scope, and then drills the receivers for a scope base. The gunsmith offers these firearms for sale.

This would be considered the manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.

12. A gunsmith buys surplus military rifles or pistols and removes the stocks, adds new stocks or pistol grips, cleans the firearms, then sends the firearms to a separate contractor for bluing. These firearms are then sold to the public.

This would be considered manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.


13. A company purchases surplus firearms, cleans the firearms, then offers them for sale to the public.

The company does not need to be licensed as a manufacturer.


14. A company produces firearms or firearm receivers and sends the firearm/receivers out for colorizing (bluing, camouflaging, phosphating, or plating) and/or heat treating. Do the companies performing the colorization and/or heat treating need to be licensed as manufacturers, and are the companies required to place their markings on the firearm?

ATF has determined that both colorization and heat treating of firearms are manufacturing processes. The companies performing the processes are required to be licensed as manufacturers. If the companies providing colorization and/or heat treating have not received variances to adopt the original manufacturer's
markings, they would be required to place their own markings on any firearm on which they perform the manufacturing process of colorization and/or heat treating.

Quoted:
First your dad needs to figure out exactly what he wants to do, and the reason I say that is because if you don't have the correct license (Type 01 dealer/gunsmith vs Type 07 manufacturer) it can be very costly (think prison time).  ATF issued a memo on this last year, which I've copied for your info:



Note - #14 was rescinded a few months ago, so (re)finishing <> manufacturing.

Once your dad figures out whether he wants to do (basic armorer/repair/refinish work versus builds), and if he's looking at working out of the house:

Steps to getting a home-based Federal Firearms License (FFL):

1) If you want to work out of your home, check your local zoning ordinances and Homeowner Association CCR's, if any.  If either document prohibits you from obtaining a business license at your residence, go no further.  The ATF will not issue you an FFL.

2) Check with your homeowner's insurance to see how much it will go up if you run a firearm business out of your home.  Hopefully you have a local agent who you've personally known and worked with for many years, as the flunkie on the toll-free call center phone will probably freak at your questions.  You may find the increase in premium alone makes getting an FFL unviable.

3) Another question for yourself - are you comfortable filing federal and state tax returns every quarter, and sales & use tax returns every month (if your state has sales & use taxes)?  If not, add CPA services to your list of expenses.

4) If you've gotten to this point, find an attorney to help you form a S Corp, C Corp, or LLC (most folks go with an LLC).  This is not the time to go with a DIY document off the internet, especially if you plan on dealing in NFA toys.  Besides, being in the firearms biz, you're going to need an attorney sooner or later anyway; might as well get to know one now.

5) Once your corporate entity is formed, obtain any necessary state and local business licenses to run a business.  If you don't have these, the ATF will not issue an FFL.  See #1 (and yes, they go to your county or city courthouse and check).

6) Call the ATF Distribution Center (301-583-4696) and ask for an application packet.  It will include several copies of the application (no carbons unfortunately), fingerprint cards, and instructions.

Note:  If you get a Type 06 (ammunition manufacturer), 07 (manufacturer), or 10 (DD manufacturer) FFL you will also have to register with and pay ITAR fees to the Department of State each year.  In 2008 the fee went up from $500/year to $2250/year.  This fee must be paid even if you never export an item you produce.

<–– 07 FFL / 02 SOT

Quoted:
Notice how the explinations of manufactury to gunsmithing differences all have the gunsmith buying and modifying the weapons?
If your customers are bringing in weapons for adaptions and alterations you are not manufacturing, you are gunsmithing.
If your dad was to start buying guns and modifying them prior to resale he would be considered to be manufacturing.

If he is going to be doing a little bit of gunsmithing, he will need a regular 01 FFL but be warned, the liability insurance, usually a minimum of 1 million in many locales, will cost him dearly to the point he may not find a sole proprietor business to be profitable.

God Bless big Government and their desires to see small businesses succeed!

Quoted:


Wow, Number 14 was some bullshit right there.   Especially the "marking" part.   Complete bullshit.